layer 1

Bitcoin Bridged Trustlessly to L2; Ethereum’s Blob Mob

Published

1 month ago

November 27, 2024

Welcome to The Protocol, CoinDesk’s weekly wrap-up of the most important stories in cryptocurrency tech development. I’m Marc Hochstein, CoinDesk’s deputy editor-in-chief for features, opinion and standards.

IN THIS ISSUE:

Ethereum’s blob mob
Staking on Starknet
Avalanche’s big upgrade
L2 teams beam over Beam Chain
Sui suffers a brief outage
Bitcoin bridged, trustlessly

This article is featured in the latest issue of The Protocol, our weekly newsletter exploring the tech behind crypto, one block at a time. Sign up here to get it in your inbox every Wednesday. Also please check out our weekly The Protocol podcast.

Network news

BEAMING OVER THE BEAM CHAIN: What’s good for the L1 is good for the L2s. That’s the assessment the teams behind zkSync and Polygon, two of the leading layer-2 networks running on top of Ethereum, gave of Justin Drake’s proposal to overhaul the $400 billion blockchain, dismissing suggestions it would make their auxiliary networks redundant. “That’s really a misconception,” said Alex Gluchowski, the CEO of Matter Labs, the developer firm behind zkSync. “The changes that Justin announced are focused on the consensus layer, not on the execution layer. It’s not going to affect the execution layer.” In addition to incorporating ZK, Drake’s proposal seeks to shorten block times, which could cut transaction costs for L2s settling on Ethereum. Drake also said he wants to introduce single-slot finality, meaning blocks with transaction data could be finalized immediately, and that information would become permanent right away. “All of those things are great because we depend on Ethereum as the global settlement layer,” Gluchowski said. Brendan Farmer, a co-founder at Polygon, also told CoinDesk he doesn’t think the Beam Chain would obsolesce layer-2s. Instead, he said, the upgrade would “make rollups work better.” However, others in the crypto community were underwhelmed by the whole plan, lamenting in particular that Drake’s five-year timeline wasn’t ambitious enough, leaving ample room for centrally-developed chains like Solana to eat Ethereum’s lunch.” Read more

SUI OUTAGE: Sui Network (SUI), a relatively new blockchain, experienced an unexpected two-hour outage on Thursday. The downtime was caused by a bug in its transaction scheduling logic, which led to its validator network crashing. The issue was resolved, the network said. Blockchain outages can take place for a plethora of reasons, ranging from a 51% attack to technical errors. A common error is that of nodes – or individual entities that process transactions – being unable to sync with each other, causing the blockchain to go offline. Software bugs may be another error vector, where outdated code can render the network’s processes inoperable. Read more

STAKING ON STARKNET: Starknet has become the first major rollup blockchain running on top of Ethereum to let users earn money by staking their tokens and validating transactions. (Metis was the first layer-2 to do so but is far smaller and is an “optimium,” a different kind of L2.) Now, anyone who has at least 20,000 STRK tokens (roughly $12,000 at recent prices) can pledge the asset as collateral and earn rewards for validating transactions. Users with less than 20,000 STRK can delegate their tokens to validators to stake on their behalf. (Validators that behave maliciously or neglect their duties stand to forfeit staked tokens.) Validators and delegators that want to withdraw staked tokens must wait 21 days to receive them as well as any rewards earned from staking. Implementing staking on Starknet is part of a multiphase plan. During this first phase, StarkWare, the company developing Starknet will study staking habits on the network, and from there will assess whether and how its validators can be given the additional responsibilities of creating and “attesting,” or confirming, blocks in the protocol. Read more

AVALANCHE’S BIG UPGRADE: Avalanche, the eighth-largest blockchain by total value locked (TVL), is moving ahead with a major technical makeover. The Avalanche9000 upgrade went live in a test network environment Monday, bringing the changes one step closer to the main network. Avalanche9000 will be the largest upgrade that Avalanche has seen. It is designed to cut the costs of sending transactions, operating validators and building apps on the network, whose native token (AVAX) is the 11th-largest cryptocurrency, with a $16 billion market cap. The foundation is trying to attract developers to Avalanche and encourage users to create customized blockchains using its technology, known as subnets. Somewhat confusingly, subnets are now officially referred to in the Avalanche community as “L1s,” even though they are roughly analogous to the layer-2, or L2, networks that augment Ethereum and other blockchains. (Avalanche’s “primary network,” the equivalent of a layer-1 in other ecosystems, is considered a subnet.) The team is hoping to bring Avalanche9000 to mainnet by yearend. Among other changes, 9000 would allow for a new type of validator with which anyone can launch their own subnets. Read more

ONE-WAY TICKET: BitcoinOS, a smart contract project led by crypto O.G. Edan Yago, has executed what it bills as the first trustless bridge transaction for any blockchain. Using zero-knowledge cryptography, a nominal amount of bitcoin (0.0002 BTC, about $19 and change) was locked up on the main blockchain’s testnet, and a proof was generated minting tokens on the testnet for Merlin Chain, a layer-2 network. No oracle or custodian was involved, according to BitcoinOS. For now, however, Merlin Chain is like the Hotel California or a roach motel for the bridged BTC. “This is one half of the bridge showing the ability to bridge assets from Bitcoin to an EVM,” BitcoinOS said in a press release. “Once the other half of the bridge is completed, Merlin Chain users can settle their Bitcoin-pegged assets back to the mainchain by proving that the tokens were burned.”

Ethereum’s Blob Mob

Usage of binary large objects, or blobs, has surged on the Ethereum network, signaling that more users are embracing layer-2 scaling tech for faster and more affordable transactions.

This year, Ethereum’s Dencun upgrade introduced blobs, which allow large chunks of data to be temporarily attached to transactions, and later deleted after the data is verified. (You can think of a blob as a sidecar that rides along with a motorcycle for a time but eventually gets detached and discarded.) Layer-2 protocols such as BASE, Arbitrum, and Optimism use blobs to bundle transactions together, process them off-chain and then post them to the Ethereum main chain for verification without permanently gumming up the works.

The number of blobs posted to the network consistently averaged more than 21,000 this month, matching the record activity seen in March, according to pseudonymous data analyst Hildobby’s Dune Analytics dashboard.

Posting blobs costs a fee, which fluctuates depending on network conditions. The fees are paid in Ethereum’s native token ether, and are burned just like regular transaction fees, taking supply of ETH off the market, a positive for the coin’s price.

In this way, blobs mitigate the much-discussed cannibalization of the main chain by L2.

The blob base submission fee spiked as high as $80 on Monday, the highest since March, and the average number of blobs posted in each Ethereum block rose to 4.3. More importantly, blob fees have burned over 214 ETH worth $723,000 over the last seven days, the sixth largest source of fee burns on the network over that period, according to data from ultrasound.money.

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Calendar

Dec. 4-5: India Blockchain Week, Bangalore
Dec. 5-6: Emergence, Prague
Dec. 9-12: Abu Dhabi Finance Week
Dec. 11-12: AI Summit NYC
Dec. 11-14: Taipei Blockchain Week
Jan 9-12, 2025: CES, Las Vegas
Jan. 15-19: World Economic Forum, Davos, Switzerland
January 21-25: WAGMI conference, Miami.
Jan. 24-25: Adopting Bitcoin, Cape Town, South Africa.
Jan. 30-31: PLAN B Forum, San Salvador, El Salvador.
Feb. 1-6: Satoshi Roundtable, Dubai
Feb. 19-20, 2025: ConsensusHK, Hong Kong.
Feb. 23-24: NFT Paris
Feb 23-March 2: ETHDenver
May 14-16: Consensus, Toronto.
May 27-29: Bitcoin 2025, Las Vegas.

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DeFi

Sui soars by over 1,300% from its lowest level in 2023

Published

7 days ago

January 4, 2025

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Sui resumed its strong uptrend, soaring by almost 20%. At last check Saturday, its price hovered at around $5.13.

Sui (SUI), a popular layer-2 network, has been one of the best-performing cryptocurrencies, soaring by over 1,312% from its lowest level in 2023.

This performance has brought its market cap to over $15 billion, making it the 13th biggest cryptocurrency in the industry.

Sui resumes strong uptrend, soars by over 1,300% from lowest level - 1 — Source: CoinGecko

Sui’s surge coincided with the continued ecosystem growth as the total value locked in its Decentralized Finance ecosystem soared to a record high of $1.96 billion.

The biggest players in its DeFi ecosystem are Suilend Protocol, NAVI Protocol, Cetus, Scallop Lend, and Aftermath Finance.

Sui partnerships

Sui also grew after securing major partnerships with top companies like VanEck, Grayscale, and Franklin Templeton. For example, Grayscale launched the Sui Trust, which has accumulated over $14 million in assets. If the Securities and Exchange Commission changes its view on crypto ETFs under Paul Atkins, that could signal that the firm will apply for a spot Sui ETF in 2025.

Sui has also had more successes that have propelled it to a record high. It has incorporated four stablecoins like USD Coin, AUSD, FDUSD, and USDY, which have a combined market cap of over $406 million.

It also launched Deepbook V3, its native onchain order book, whose trading volume jumped to over $1 billion. Its DEEP token has gained a market value of over $375 million.

Meanwhile, Sui’s DEX ecosystem is booming, handling over $46 billion in volume since its inception.

More data shows that Sui’s futures open interest soared to a record high of $963 million. This is a notable increase from this week’s low of $650 million and a sign that SUI’s token is gaining traction among investors.

Sui price forecast

The daily chart shows that the SUI token has been bullish this year, rising for four straight days and flipping the resistance at $5 into resistance. By doing that, the coin invalidated the risky double-top pattern whose neckline was at $4. A double-top is a popular reversal sign in the market.

The price of Sui has been supported by the 50-day moving average, which it has failed to move below since September last year. It is also a cheap coin, as the Z-score of the Market Value to Realized Value has fallen to 2.7. A cryptocurrency is said to be highly expensive when it has a Z score of 3.8.

Therefore, technicals suggest that the SUI price will rise to the extreme overshoot of the Murrey Math Lines at $5.50. A move above that level will raise the odds of it moving to the next crucial level at $10.

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layer 1

3 key reasons BNB price may surge to $1,155 in 2025

Published

1 week ago

January 1, 2025

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The Binance Coin price held steady above $700, as a unique chart pattern pointed to more gains, potentially to $1,155 in the near term.

Binance Coin (BNB) was trading at $707 on Jan. 1, a few points below the December high of $794 and 200% above its 2024 low.

The BNB coin faces three key catalysts that could push it much higher in the first quarter of this year.

First, the network has continued to burn its tokens, a move that is expected to reduce its outstanding coins to 100 million from 144 million over time. According to BNB Burn, the network is expected to conclude a 1.63 million token burn worth $1.01 billion soon. It will then burn another 1.5 million BNB coins worth $1.089 billion in the first quarter.

On top of these quarterly autoburns, the network burns more tokens each day from the gas fees generated. This approach has incinerated 246,950 coins with over $175 million since its inception a few years ago.

These burns will create more value for BNB price over time by making its tokens rarer and increasing the sums staking investors get. Binance Coin’s staking yield has dropped from 12% in November to 2.3% as the staking ratio rose slightly to 20.32%.

Second, the Binance Smart Chain ecosystem is doing relatively well even as competition in the industry rose. It has over 905,640 active addresses, a total value locked of over $5.5 billion and stablecoins worth $6.86 billion.

BNB Chain’s DEX protocols have continued doing well. The volume handled by its protocols rose by 10% in the last seven days to over $13.42 billion. That has brought the total volume since inception to $1.16 trillion, making it the second-biggest player after Ethereum (ETH), which has handled over $3.4 trillion.

BNB price strong technicals

Third, Binance Coin has some strong technicals that may push it much higher in the longer term. The weekly chart shows that the BNB price has been slowly forming a cup and handle chart pattern, a popular sign of continuation.

The cup section formed between 2021 and June 2024, while the handle area formed between June and November. We find the depth of the cup is about 74%. By measuring the same distance from the cup’s upper side, the BNB price target is $1,155, which is about 63% above the current level.

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layer 1

Cardano price forms rare pattern pointing to a Santa Claus rally

Published

4 weeks ago

December 16, 2024

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Cardano’s price has remained sideways this month, but a rare chart pattern indicates a potential comeback in the coming weeks.

Cardano (ADA), the popular layer-1 cryptocurrency, is trading at $1.06, down nearly 20% from its highest level this year.

The pullback followed a rally that pushed the coin to a multi-year high of $1.327 in November during the crypto bull run. This decline mirrors the performance of other cryptocurrencies, like Avalanche (AVAX) and Binance Coin (BNB), which have also retreated from their year-to-date highs.

Cardano’s drop coincided with a decline in the total value locked (TVL) within its decentralized finance ecosystem. According to DeFi Llama, Cardano protocols now hold over $597 million in total assets, down from last month’s high of nearly $700 million. The largest protocols in its ecosystem include Liqwid, Minswap, Indigo, and Splash Protocol.

Whale activity for Cardano has also slowed, and the number of active addresses over the past 24 hours is below 43,000. Meanwhile, open interest in the futures market has continued to decline.

However, several catalysts may push Cardano’s price higher in the short term. For instance, rising crypto demand—highlighted by Bitcoin’s surge past $106,000—could support ADA. Additionally, Cardano may benefit from a potential spot ADA ETF listing as early as 2025.

In the near term, the coin could also experience a boost from the “Santa Claus rally,” a phenomenon where asset prices tend to rise ahead of Christmas Day.

Cardano price has formed a rare chart pattern

The daily chart shows that the ADA price staged a strong comeback in November after Donald Trump won the election. It has since slowly formed a bullish pennant chart pattern, consisting of a long vertical line and a symmetrical triangle. This pattern is nearing its confluence point, suggesting that a bullish breakout could occur.

Cardano has also formed a golden cross pattern, where the 50-day and 200-day Exponential Moving Averages have made a bullish crossover.

As a result, Cardano is likely to see a strong bullish breakout in the coming days. If this happens, the coin could rise to $1.325, its highest point this year, representing a 23% increase from its current level. A drop below the support at $1.00, however, would invalidate the bullish outlook.

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